Land O'Lakes Welcomes Improved Credit Rating

Land O'Lakes, Inc. has reported continued strong sales across its business portfolio, with net sales up for the third quarter and year-to-date.

Net sales were $2.77 billion for the third quarter, up from $2.37 billion for the same quarter last year. Year-to-date sales (to September) were $9.70 billion, up 16 per cent from $8.39 billion for the first three quarters of 2010. Year-to-date, sales were up in all of the company's core businesses (Dairy Foods, Feed, Crop Inputs and Eggs).

Investments in growth, recent declines in dairy markets, and the timing of administrative expenses contributed to lower quarterly net earnings, while year-to-date net earnings remained well ahead of 2010.

Land O'Lakes reported a $30 million net loss for the third quarter, versus $7.3 million in net earnings for the same period in 2010. Year-to-date net earnings (through September) were $138.1 million, up 33 per cent over the first nine months of 2010 ($103.6 million).

Land O'Lakes President and Chief Executive Officer, Chris Policinski, said the company's year-to-date results through September reflect:

• strong performance in core branded and proprietary product lines
• continued success of innovative new products, and
• Total Margin Management, an ongoing company-wide initiative that is enhancing cost efficiency and margins – providing more resources for strategic growth.

Mr Policinski said: "I'm pleased to report that our core brands and products continue to perform well, as measured by share growth in each of our core businesses. Our innovative new products are also contributing strongly to sales and earnings. These results demonstrate that even in a difficult economy, customers and consumers value well-known and trusted brands."

Looking ahead, Mr Policinski noted Land O'Lakes is in a positive position as the cooperative enters the traditionally strong fourth quarter, when holiday cooking and baking enhances Dairy Foods' results and winter weather drives feed demand.

He said: "Over the past several years, we've continued to build our brands and market presence. The consistent work we do to ensure the quality of our products, and the new products we've introduced, are also key competitive advantages. With these strengths, Land O'Lakes is well-positioned to perform in the very important fourth quarter."

Mr Policinski noted that the company is accelerating growth initiatives both in its US operations and internationally.

He explained: "Even in an uncertain economy, we have been able to drive short-term earnings performance, while we invest in longer-term growth efforts."

Going forward, Land O'Lakes will balance the investment requirements of growth with ongoing efforts to maintain a solid balance sheet. Land O'Lakes' total debt as of 30 September 2011 was $1.4 billion, up $0.2 billion from the same date one year ago. The increase was due to higher working capital needs related to growth, and an increase in commodity prices.

Recently, the company's strong financial foundation was recognised by both Standard and Poor's and Moody's Investor's Service, which raised Land O'Lakes' credit rating to Investment Grade.

"These upgrades acknowledge the company's strong financial position and our ability to grow," Mr Policinski added.